The widely popular topic of the United States trade war with various countries seems not to get exhausted, therefore just two days ago during Presidents’ Trump speech in Florida we have seen him trying to defend his trade policies. He has devoted a significant amount of time discussing the US and China tit-for-tat tariffs and has concluded that China would eventually pay dividends for the US, however it is important to mention that United States trade partners, including China have zeroed in on American farmers with retaliatory tariffs, where the comment from the US President was that the fact American farmers were targeted is ‘not good’ and ‘not nice’ and he believes that the US farmers can handle the effect.
In addition, the US President Administration had announced a farm aid package worth of $12 billion just last week, nevertheless it was not received as expected, thus some farmers and farm-state lawmakers have disapproved the move with a stance that they would rather trade with no tariffs that have to take governments help. Similar is the opinion of the US Chamber of Commerce, which has warned that the $12 billion proposed may lead to an additional cost of $27 billion and is more for the move to remove the harmful tariffs, as more and more American companies are facing difficulties to sell abroad the products made in the US amidst the growing trade war. Furthermore, according to the analysis the estimated for an individual bailout cost for more than 2 dozen sectors and industries may have a total tale of $39 million to taxpayers, which is far more than the initial planned bailout.
In addition, the global factory growth in July has been affected by the trade conflict between the US and China. According to Reuters, the global economic activity has remained solid, however has already passed its peak. However, the deterred confidence, slowing economic growth and fears over the trade war are not seen as discouraging major central banks shifting from their ultra-loose monetary policies, where the ECB has reiterated its plans last week to end the stimulus program this year and the BoE is still expected to rise borrowing costs today.
Regarding the important news releases, yesterday we have seen that the euro zone manufacturing growth has remained passive in the previous month due to the worries regarding trade tensions, where the HIS Markit final manufacturing PMI in July came up to only 55.1 from Junes’ 54.9, which was an eighteen month low. The July’s UK manufacturing PMI came at 54.0, as opposed to the expected 54.2, showing the slowest pace growth in 3 months. On the other hand, positive news came from the US, where the ADP non-farm employment change reading came at 219k, while the expectancy was 186k. Nearly every industry has posted strong gains in the previous month and there are no signs of a slowdown in the labor market.
ECONOMIC CALENDAR EVENTS FOR AUGUST 2nd
AUD Trade Balance
CHF Retail Sales y/y
CHF Manufacturing PMI
GBP Construction PMI
GBP BOE Inflation Report
GBP MPC Official Bank Rate Votes
GBP Monetary Policy Summary
GBP Official Bank Rate
GBP BOE Gov Carney Speaks
USD Unemployment Claims
